Mixed economic news fails to revive stock market

Thursday

NEW YORK (AP) — Stocks fell again Thursday as mixed news on the U.S. labor market and retail sales failed to allay worries that Greece's debt woes would spread to other parts of Europe.

The euro fell further against the dollar, hitting a new 14-month low. The euro has tumbled against the dollar since last fall as faith in Europe's shared currency dwindles. Greece's debt crunch is widely seen as a test of Europe's ability to restore fiscal discipline to the weak economies in its union and keep the decade-old currency viable.

"It's going to drop further," Tim Speiss, chairman of the personal wealth advisers practice at Eisner LLP in New York, said of the euro. "The longer they defer, they're just priming the pump for unrest."

The dollar's rise pushed commodities prices lower, especially oil. That sent prices of oil companies like ExxonMobil and Chevron lower.

In economic news, the Labor Department said new claims for jobless benefits fell lass than expected last week. It also said productivity rose more than forecast in the first quarter, but that was due in part to a drop in labor costs, which is a negative signal for consumer spending.

Greece passed a bill in its Parliament after heated debate that calls for unpopular cuts in public spending in pensions and other areas, as well as tax increases. Greece needed to approve the austerity measures to be eligible to receive a $141.9 billion aid package from the 15 other countries that use the euro and the International Monetary Fund.

Greece needs access to an initial portion of the money by May 19 to cover $11.6 billion in debt payments, or else it will likely default.

Even if Greece gets the money it needs, there are still worries that the loans would be only a temporary fix to a growing debt problem across the continent. Portugal and Spain have also seen their debt ratings downgraded recently.

In early afternoon trading, the Dow Jones industrial average fell 87.21, or 0.8 percent, to 10,780.91. The Standard & Poor's 500 index fell 12.24, or 1.1 percent, to 1,153.66, while the Nasdaq composite index futures fell 28.48, or 1.2 percent, to 2,373.81.

The Dow is off more than 3 percent since Monday's close.

The Labor Department's weekly report on initial jobless claims showed 444,000 workers applied for unemployment benefits last week. That's down from a week earlier, but fell short of the 440,000 estimated by economists polled by Thomson Reuters.

It was the third straight weekly drop in new claims, but economists say claims have not yet fallen to levels that would indicate consistent job growth. Initial claims would have to dip to around 425,000 to signal employers are adding jobs. High unemployment remains one of the key issues facing the U.S. economy.

"Even though we didn't hit a home run with it, we hit a single," Larry Rosenthal, president of Financial Planning Services in Manassas, Va., said of the weekly jobs report. "This a process we have to work through. This is a long-term recovery."

The weekly claims report comes a day before the Labor Department is expected to say the unemployment rate remained at 9.7 percent in April. The monthly jobs report due out Friday is by far the most important piece of economic data watched by investors.

An improving employment picture would likely boost consumer sentiment and make people more optimistic about a recovery.

"It's a whole lot easier to be confident when you have a job," said Bryan Hopkins, president of Hopkins Wealth Management Group in Anaheim Hills, Calif.

A separate Labor Department report showed first-quarter productivity rose at an annual rate of 3.6 percent, better than the 2.5 percent forecast by economists. The gain was due in part to a drop in labor costs, which means companies should be able to maintain strong profit margins. However, it also means that consumers' incomes continue to be squeezed, which could slow a rebound in spending.

That slow rebound in spending was seen as retailers provided a mixed picture for April sales. Sales largely slowed from March's strong pace, partly because Easter was earlier this year. Macy's Inc. was among the retailers that topped forecasts, but its shares still slid. Gap Inc. and Target Corp. fell sharply after reporting disappointing monthly sales results.